Managing the Concession Request

One of the more challenging customer conversations every salesperson faces is the negotiation discussion. It’s almost inevitable that the climax of this dialogue will be the customer’s request for a concession. What’s the most effective way to manage this conversation to ensure that both parties win?

The first step in a successful customer negotiation is planning. What factors favor you vs. which favor the customer? What additional information is needed from the customer to better position your offering vs. what other information do you expect the customer to solicit from you? What are your target and walk-away prices vs. what is your expectation about the customer’s target price? What customer needs must be met and why is it necessary that this occur? Without a plan, the probability is low that a win-win conclusion to the negotiation will result.

Negotiation is a process. Following a specific set of steps through the process preserves a constructive dialogue with the customer and helps break the tendency of settling too soon.

The first step in the process is to defer the customer’s early request for a concession. It starts by acknowledging that price is important, and asking permission to clarify the needs that the customer has shared: “I understand that price must be addressed, but to ensure that we are making this agreement as valuable as possible for you, may we spend a few minutes to ensure that I thoroughly understand your needs? Is that agreeable?

While this request is simple and straightforward, it accomplishes much. It secures the customer’s permission to defer the price discussion; without consent from the customer, this request can sound too assertive. It confirms that the end result of this discussion is closure, a result on which both parties agree. And it enables the next step in the process to occur, that is, to uncover why the customer’s stated needs are important, so that this information can be used to expand the options open for negotiation beyond price; this leads to trading-off lower-value solutions first, solutions that may actually produce more value for the customer, before arriving at price.

When the final deal is struck, both parties will appreciate the comprehensive approach of this process and both will feel that they got the best deal that could be negotiated. And, the customer will have greater respect for the salesperson and the total value produced by his/her organization.

How could you improve your negotiation planning?

What other tactics might be used to break the tendency of settling too soon?